Australian mortgage holders are being urged to give themselves an interest-rate cut ahead of the Reserve Bank of Australia\u2019s meeting on Tuesday. <\/p>\n
The RBA is predicted to hold the official cash rate at 3.60 per cent in September, but that doesn\u2019t mean Australians can\u2019t reduce their mortgage repayments today. <\/p>\n
Compare the Market economic director David Koch says Australians can create their own interest-rate cut by fixing their mortgages to a lower interest rate. <\/p>\n
\u201cWe\u2019ve seen several banks, including CBA and Westpac, start to offer fixed rates with a four in front. Many variable rates on the market are hovering around the mid-fives,\u201d he said. <\/p>\n
\u201cIf you\u2019re looking for certainty around your repayments for a set period, a fixed-rate contract could be worth considering.\u201d<\/p>\n
Mr Koch concedes fixing interest rates comes with the major drawback of not benefiting from further interest-rate relief. <\/p>\n
While the central bank is expected to hold rates after its September meeting, experts predict further interest-rate relief in November. <\/p>\n
\u201cThe RBA is taking a slow and steady approach to this rate cycle,\u201d Mr Koch said. <\/p>\n
\u201cBut the good news is there are things you can do to reduce your rate in the meantime.\u201d <\/p>\n
Separate Commonwealth Bank research suggests that Australians haven\u2019t adjusted their mortgage repayments since the RBA\u2019s rate-cutting cycle began. <\/p>\n
According to the major bank, just 11 per cent of eligible home loan customers reduced their direct debit repayment following August\u2019s interest-rate cut.<\/p>\n
First-home buyers were more likely to keep their repayments unchanged, with just 8 per cent choosing to reduce their direct debit amount. <\/p>\n
Commonwealth Bank executive general manager home buying Marcos Meneguzzi said most customers were leaving their rates unchanged.<\/p>\n
\u201cFollowing each rate cut this year, the percentage of customers reducing their direct debit repayments has been almost identical at the same point in time,\u201d he said. <\/p>\n
The 0.25 per cent decrease to 3.60 per cent left average borrowers with a $660,000 loan about $105 better off every month.<\/p>\n
Mr Koch also said some banks had cashback offers in the thousands for borrowers who refinanced. <\/p>\n
Meanwhile, there can be 0.48 per cent difference between some advertised rates.<\/p>\n
\u201cThat difference could represent a saving of $201 on monthly repayments \u2013 or $2412 annually \u2013 for someone with an average loan of $660,000,\u201d Mr Koch said<\/p>\n
\u201cOf course, these competitive rates are typically reserved for new customers, so you need to do a bit of research.<\/p>\n
\u201cThe best rates might not be with your current lender, but a tiny bit of effort could leave a lot of money in your pocket.\u201d<\/p>\n